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Too Crazy to Be Made Up

New court documents make the media giant look like a digital dinosaur.

Regardless of how its legal battle with YouTube ultimately plays out, the court documents that got unearthed yesterday arguably cement Viacom's (NYSE: VIA) status as a company that simply doesn'tget it when it comes to online video.

The claims made by YouTube in both its legal memorandum, and an official statement from its Chief Counsel, have little in common with the dry, sleep-inducing legalspeak that you'll normally find in such statements. Instead, they read like the script to a bizarre corporate-espionage skit you might find on Viacom's Comedy Central channel.

YouTube claims that even while Viacom was suing YouTube to the tune of $1 billion for copyright infringement, the media conglomerate hired "no fewer than 18 different marketing agencies" to upload content onto the site, all while using user names and email addresses that couldn't be linked to Viacom ... or so it thought. What's more, Viacom, according to YouTube, sent its own employees on trips to Kinko's to upload content, and often ended up in the embarrassing position of asking YouTube to reinstate content that its own copyright censors had flagged for removal.

Oh, and did you hear that Viacom reportedly wanted to buy YouTube before it dispatched its lawyers against it? I'm pretty sure that even Inspector Clouseau would get a laugh out of all of this.

The big pictureAt this point, these are all just allegations, rather than anything proven in a court of law. But at least from my vantage point, the breadth and uniqueness of YouTube's claims make them look like they belong in the "too crazy to completely make up" category.

And even if only a fraction of YouTube's allegations end up being conclusively proven, that's more than enough to make Viacom look like a frightened, flat-footed dinosaur that can't get out of its own way in the world of online media. You get the impression that even as it reluctantly sees the value of sites like YouTube in promoting its content, Viacom wishes it could treat the web as a personal fiefdom, controlling exactly what users see, and where they see it. The company's recent, short-sighted decision to pull episodes of The Daily Show and The Colbert Report off of Hulu, and make them available only on Comedy Central's site, also bears this out.

Even if Viacom wins, it losesIt's possible that Viacom will end up winning against YouTube in court. While I think Viacom's comparison of YouTube to peer-to-peer scofflaws like Napster and Grokster is laughable given the advanced copyright-filtering tools YouTube has made available, and the deals it's made with big-name media companies such as Disney(NYSE: DIS), Time Warner(NYSE: TWX), Sony(NYSE: SNE), and CBS(NYSE: CBS), the emails that Viacom's turned up of YouTube execs, if legitimate, do suggest a lax attitude toward copyright-enforcement during the company's pre-acquisition days. And given the judgments won by the RIAA and MPAA against individuals, I can see Viacom getting a jury to side with it against a corporate giant like YouTube's owner, Google(Nasdaq: GOOG).

But whether or not Viacom wins its court battle, it's looking like a loser in the online video wars. While its rivals find ways to profit from YouTube and Hulu, Viacom embarrassingly flails away in its attempts to hoard its beloved content while also desperately trying to leverage the video portals that consumers have flocked to.

YouTube marches onAs for YouTube? It should do just fine without Viacom's support. It looks like the site is finally turning profitable. As bandwidth costs keep dropping and its ad machine keeps ramping, the site will probably turn into a big cash-generator for Google in time.

I think YouTube could still do a better job of appealing to its media partners when it comes to differentiating the professional content on its site from the amateur stuff. But either way, it's sure not going the way of Napster or Grokster. And smarter media companies will deal with that fact rather than fight it.